GENERAL FARM PROGRAM 1123 



of the crop year the probable per unit insurance payment for the year; and (3) 

 to extend to banks making loans to claimant farmers on the security of evidence 

 of their share in the normal crop marketing, a guaranty of repayment of loan up 

 to one-half of each borrower's attested claim for insurance payment for such 

 commodity. 



(d) In the present crop-yield insurance program for grains, producers pay 

 premiums in bushels, or fractions of bushels, per acre insured. Different pre- 

 mium rates have been offered for insuring different percentages of the normal 

 yield, according to the farmer's choice. Normal yields have been established for 

 coimties, areas within coimties, and even for separate farms. Much data has 

 been collected regarding yields, cost of production and the like. All of this can 

 be useful in setting up the system of farm-income insurance. 



It would seem desirable that premiums be paid in the dollar equivalent of 

 "kind" for farm-income insurance as well as for crop-yield insurance. The 

 effect is that farmers will pay higher cash premium rates when prices are high, 

 and lower rates when prices are depressed. This assists in building up reserves 

 during periods of prosperity. 



Like unemployment insurance, it will be impossible to calculate the schedule 

 of premiums for farm-income insurance on an actuarial basis. The plan is to be 

 vokintary, therefore premiums must appeal to farmers as reasonable. It is 

 recognized that the Federal Treasury will have to stand a substantial part of 

 the loss. Premium rates, jiossibly, should be higher also in bushels in prosperous 

 times, lower in periods of depressed prices. This, in itself, will be countercyclical 

 to a degree. It is justified by the fact that risk of loss is greater when prices are 

 high, less when they are very low. P'armers can afford more substantial premium 

 payments in good times, and payments are felt less because provision must be 

 made that premiums are deductible from income as a business expense for Federal 

 tax purposes (if such is not already the ruling). 



(e) Insurance, both for crop yield and farm income, should be written on a 

 o-year or longer basis. This is needed to avoid adverse selectivity, and to make 

 possible the accumulation of reserv^es in good times. 



Provision will have to be made in the policies for changes of farm ownership 

 and tenant-landlord relationships in respect to insurance. 



(/) The determination and announcement in advance for each crop year, of 

 "normal crop marketing" and "absolute insurance price" bj- the Secretary 

 of Agriculture, provides a means of announcing production goals in the first 

 instance, and a method of "forward pricing" in the second, which may influence 

 farmers in making desirable production adjustments. 



(g) The Corporation shall establish within each agricultm-al State or geograph- 

 ical division a Federal farm insurance rating bureau which shall be charged with 

 the duty of gathering all statistical data needed by the Corporation and the 

 Secretary of Agriculture for the conduct of the plan. These bureaus shall aiso 

 make, or cause to be made under their supervision and direction, all necessary 

 investigations of the operations of individual producer policyholders for the 

 purpose of assisting the Secretary of Agriculture in determining each producer's 

 'normal share" and "actual marketable production"; enabling the Corporation 

 to write policies suitable to the individual farmer's operations, to determine losses 

 and settle claims. 



These bureaus, like the Corporation itself, shall be empowered with the consent 

 of the agency concerned, to accept and utilize, on a compensated or uncompensated 

 basis, the officers, employees, services, facilities, and information of any agency 

 of the Federal Government, or of any State or political subdivision. 



(h) A limitation shall be placed on the amount of total income which any one 

 producer can insure except, perhaps, at an increased schedule of rates determined 

 on an ascending scale until it reaches, as nearly as possible, an actuarial l)asis. 

 The maximum amount of insurance carried at standard rates should take into 

 account family living expenses and cash outlays for maintaining production 

 capacity. Large farmers should be more nearly able to underwrite their own 

 farming operations. 



{i) Farmers shall have the further option of taking policies for a 5-year or longer 

 period based on a lower percentage of the "absolute insurance price" at a cor- 

 respondingly reduced premium. 



FURTHER CONSIDERATIONS 



L In connection with the farm-income-insurance plan presented in this state- 

 ment, the difficulties, etc., are minor and technical that might be expected to 

 arise with reference to definition of "normal crop marketing," of "normal shares" 



